On 27 June 2013, the Director of the Serious Fraud Office (SFO) and the Director of Public Prosecutions (DPP) published a consultation document for the proposed draft code of practice on the use of deferred prosecution agreements (DPAs).  Two days before, the SFO’s Chief Investigation Officer Kevin Davis confirmed at the C5 anti-corruption conference that DPAs were not ‘cosy deals behind closed doors or cut-price justice’ but a method of responding to corporate wrongdoing.  He anticipated that they would lead to an increase in corporate self-reporting. 


DPAs are a new enforcement tool available to the CPS and SFO that will enable corporate organisations to deal with allegations of criminal activity without being prosecuted. The current timetable is for DPAs to be introduced in February 2014. The concept of DPAs is not new and their use has been particularly prevalent in the USA, however there are important differences in the proposed DPAs, making them (in the words of the Solicitor General) ‘peculiarly British’ - in particular the role for the judiciary in overseeing them in the UK.

In essence, where a corporate body is suspected of committing a criminal offence, the prosecutor may invite the organisation to enter into negotiations to agree a DPA as an alternative to prosecution. If no agreement is reached, the prosecution may proceed as usual.  Judicial approval will be required at an early stage to determine if the circumstances of the case are appropriate for the use of a DPA in principle; such approval will be provided in a private court hearing. If approved, the parties will engage in further discussions to agree the exact terms of the DPA, which are likely to include the size of any fine payable, compensation to any victim(s), payment of the prosecutor’s fees, improvements to be implemented to any compliance programme and on-going monitoring of the company.

Once agreement has been reached between the parties, the court will be asked to provide final approval, following which there will be a court hearing in public at which charges will be laid. The hearing will then be immediately adjourned. The details of the DPA will subsequently be published.

If the terms of the DPA are complied with within the given timescale, the prosecutor will return to court and charges will be dropped. No further prosecution can then be brought for that alleged offence unless it is found that the corporate body knowingly gave false, inaccurate or incomplete information to the prosecutor.

If the terms of the DPA are not complied with, the prosecutor has the option of seeking a variation to the DPA to enable compliance or to prosecute, depending on the circumstances of the non-compliance.

The consultation

The consultation document seeks comments on eight points covered in the draft code including the circumstances when a prosecutor should consider a DPA, the criteria to apply when making this decision and the anticipated disclosure process. Among other things, the draft code also sets out potential terms to be included in a DPA and the approach to determining an appropriate level of financial penalty.

A summary of the draft code includes:

  1. the test for entering into a DPA, which comprises an evidential and public interest test.
  2. the suggested factors a prosecutor may take into account when deciding whether to enter into a DPA, to include:
    1. Existing Codes of Practice and Guidance, in particular The Code for Crown Prosecutors, The Joint Prosecution Guidance on Corporate Prosecutions, the Bribery Act Joint Prosecution Guidance and The DPA code.
    2. Additional public interest factors in favour of and against prosecution, and in particular the weight given to any self-report
    3. The invitation to enter into DPA negotiations, in particular the process, transparency and record keeping of any negotiations, the contents of the letter of invitation and undertakings to be provided concerning confidentiality and use.
    4. Subsequent use of information obtained by a prosecutor during the DPA negotiation period, in particular recognising that “there is a balance to be struck between encouraging all parties to be able to negotiate freely, and the risk that [the organisation] may seek knowingly (or when it should have known) to induce the prosecutor to enter into a DPA on an inaccurate, misleading or incomplete basis.”
    5. Unused Material and Disclosure to be provided in order to ensure a fair process.
  3. Statement of facts, in particular that factual issues should be resolved between the parties “to allow the court to agree terms of the DPA on a clear, fair and accurate basis.”  This is significant as “the court does not have the power to adjudicate upon factual differences in DPA proceedings.”
  4. Terms of the agreement, which are in general are required to be “fair, reasonable and proportionate”, and more particularly must:
    1. clearly set out the measures to be complied with;
    2. be proportionate to the offence and tailored to the specific facts;
    3. set out the start and end date of the DPA;
    4. record that the DPA relates only to the offences particularised in the draft indictment;
    5. include a warranty from the company that the DPA is not based upon inaccurate, misleading or incomplete information relevant to the matters covered by it; 
    6. set out the on-going duty throughout the life of the DPA for the organisation to notify the prosecutor matters it suspects would have been relevant to the offences particularised in the draft indictment and provide where requested any documentation or other material;
    7. include provisions for any suggested financial terms which may include, but are not confined to, compensating victims, payment of a financial penalty, payment of the prosecutor's costs, donations to charities which support the victims of the offending and disgorgement of profits. General provisions in relation to financial penalties should include proportionality, transparent and consistent approach, terms of payment and consequences of late payment terms;
    8. set out any other non-financial terms, for example co-operation with sector wide investigations and/or a requirement for the organisation to put in place a robust compliance and/or monitoring programme.
  5. Monitors are a key concept in DPAs with a “primary responsibility is to assess and monitor [the organisations] internal controls and advise of necessary compliance improvements that will reduce the risk of future recurrence of the conduct subject to the DPA“.  The proposed guidelines deal with specific issues such as:
    1. Costs to be borne buy the company
    2. access to all aspects of its business
    3. selection of monitor, including the organisation indicating their preferred monitor and why
    4. length of time the monitors should be appointed, including an extension if the organisation has not satisfied its obligations during the term of the initial periode) confidentiality of monitors’ reports and associate correspondence with disclosure restricted to the prosecutor, organisation and the court, save as otherwise permitted by law.
    5. Contents of the monitors agreement
  6. Financial Penalty
    1. The prosecutor is to draw to the court judge’s attention where possible and relevant any victim statement or other information about the impact of the alleged offence on the victim: any statutory provisions relevant to the offender and the offences under consideration; any relevant Sentencing Council Guidelines and guideline cases; the aggravating and mitigating factors of the alleged offence under consideration.
    2. Any financial penalty is to be ‘broadly comparable to a fine that the court would have imposed upon P… following a guilty plea.’[Schedule 17, Paragraph 5 (4)].  
    3. There is a broad discretion in relation to financial penalties and to provide for a discount equivalent to that which would be afforded by an early guilty plea but also in appropriate cases there may also be an additional reduction where an organisation assists.
  7. Preliminary hearings.  The proposed code includes the contents, procedure and reference to the Criminal Procedure Rules
  8. Final hearing.  The proposed code includes the contents, procedure and reference to the Criminal Procedure Rules and publication of details of the agreement by the prosecutor
  9. Breach of a DPA are covered, in particular procedures for
    1. Alleging and proving breach of a DPA, including resolution for minor breaches, procedure and remedy
    2. Termination following breach of a DPA
    3. Post Termination Process
  10. Variation of a DPA.  Two possible situations are contemplated: firstly, where a breach has occurred and the court has invited the parties to agree a solution to that breach, which the court then has to consider whether to approve; second, where a breach has not yet occurred, but, absent the variation, is likely to.  Both require the prosecutor to apply to the court to seek a declaration that a variation is acceptable.  The organisation does not have a right to apply to the court for a variation, but may request the prosecutor to do so. 
  11. Discontinuance
  12. Applications in Private
  13. Publishing decisions and postponement.  The proposed code states that “Transparency remains a key aspect of the success and proper operation of DPAs, and accordingly Schedule 17 of the Act requires in prescribed circumstances the prosecutor to publish on its website orders made by the court or decisions made by the prosecutor.”

The deadline for responses to the consultation is 20 September 2013.

DPAs are an important new tool for the CPS and SFO to use in tackling corporate criminal behaviour.  The SFO and Solicitor General have been at pains to point out that there is still a place for civil settlements.  The thinking behind their introduction is that it will free up the SFO and CPS’s resources to concentrate on the most serious and complex cases against corporates and individuals. 

There will be a great deal of interest in the coming months over the introduction of DPAs.  The proposed code provides an insight as to how DPAs may work in practice and assist companies to understand how these proposals may impact on them in the future.  However, what the code cannot do is mitigate against the inherent uncertainty in the ‘peculiarly British’ process given the Judge’s effective right of veto, should he or she not find the DPA to satisfy the requisite test of being ‘in the interests of justice’ and ‘fair, reasonable and proportionate’.